Soft Market Seemingly Hits Bottom, According to RIMS Benchmark Survey™
November 2011
Average renewal premiums in three of four
lines of business tracked by the RIMS Benchmark Survey™ increased in the
third quarter, strongly suggesting that an 8-year period of falling
commercial insurance rates is at its end.
by
Advisen Ltd.
The RIMS Benchmark Survey™ tracks changes in average program renewal
premiums for directors and officers (D&O) liability, general liability (GL),
property, and workers compensation insurance, as reported by risk managers.
The survey is administered by Advisen Ltd.
Of the four lines, only D&O
liability posted a decrease, falling 1.9 percent. The average renewal
premium increased 1.2 percent in GL, 1.6 percent in property, and 2.1
percent in workers compensation.
"Indications have been strong over the
past couple of quarters that the market was near bottom, so it's not
surprising to see premiums drifting upward a bit now," says Dave Bradford,
president of Advisen's Research & Editorial Division and editor-in-chief
of the survey. "Sharply higher rates like we saw in 2001 are nowhere in
sight, though. The market is still quite competitive."
Premiums skyrocketed in 2001 and 2002, following a deep and prolonged
soft market. The stock market crash of 2000–2002 and massive insured losses
from the September 11 terrorist attacks are often cited as catalysts for
that hard market.
"Average premiums may be showing modest increases, but it seems pricing
generally is still quite favorable in most lines," says Frederick Savage,
FCII, ARM, RIMS board of directors. "It would likely take a very large
catastrophe or series of catastrophes to trigger a hard market along the
line of what we saw a decade ago. Of course, that could happen at any time,
but at the moment the insurance market seems to be behaving rationally. Risk
managers should budget for somewhat higher insurance costs, but capacity
remains abundant, which should help to dampen rate increases."
About the RIMS Benchmark Survey™
RIMS Benchmark Survey™ is produced by Advisen, Ltd., which collects and analyzes the data and provides the
technology infrastructure for the survey's online services. Risk managers
and buyers of insurance contribute either directly to RIMS Benchmark Survey™
or by using our "data participation letter" to authorize their broker to
provide the client's program details. The letter is available at
www.RIMS.org/brokerform or by calling (800) 655–6590. Risk management
professionals can also contribute by faxing current and prior year policy
schedules to (212) 655–7453 or e-mailing to .
Risk managers who contribute data to the
survey can benchmark the structure of their commercial insurance programs,
retained loss costs, exposure demographics, and total cost of risk against a
highly relevant group of peer companies. Additionally, survey respondents
can use software personalized and configured for their needs to view
detailed schedules of insurance, programs for current and past years, and
full-color program tower charts. Both benchmark charts and program charts
can be downloaded into any presentation for senior management. The results
of the RIMS Benchmark Survey™ are available online or in an annually
published book. Visit
www.RIMS.org/benchmark for details.
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